Wednesday, December 12, 2012

One of the most important sayings in business is “you can’t improve what you don’t measure.” This anonymous quote explains why the American economy is weak and crime, unemployment, and poverty are major problems throughout the country. Politicians recognize that all politics is local. However, they ignore the fact that public policy solutions to chronic social problems must be based on local employment statistics.

Federal, state and local government policies have failed because they are based on national economic models that define a community where 100 people make $1 million a year and 1,000 destitute people make $0 a year as a thriving neighborhood (because the average annual salary of the 1,100 residents is $90,909.) This faulty economic analysis has allowed government to largely ignore the employment needs of people struggling in economically challenged neighborhoods. This results in social problems plaguing communities where unemployment is rampant.

The quickest way to turn a community around is to ensure that a majority of residents have a living wage job (where an individual earns sufficient money to cover basic living expenses-this is typically four times the average housing costs). When these jobs are plentiful chronic problems like crime, low graduation rates, poverty and poor healthcare disappear. Tragically, living wage jobs are vanishing in local communities because the small and independent businesses providing these jobs are under assault in America.

Government policies have ensured that the large businesses that are supposedly “too big to fail” increase profit margins. Mega-businesses like the major banks, oil companies and big-box stores are being given unfair financial gifts that have provided them with a significant competitive advantage over the small independent businesses that provide living wage jobs to most local residents. Economists have ignored the fact that local businesses who hire most people in America are “too small to fail.” The small size and entrepreneurial nature of these companies motivates them to take the risk of hiring local residents (who historically have been the backbone of the American workforce and economic system).

Unfortunately, because local employment trends are rarely measured, politicians are not held accountable for the loss of living wage jobs resulting from the closing of small businesses. Thousands of local businesses are dying in secret across the country. It is therefore essential that every municipality in America utilize a simple measure of free-market living wage employment that holds local, county, state and national politicians accountable for the closing of small businesses and the loss of local jobs. This simple measure is called the “Living Wage Index” because it quantifies the percentage of people holding jobs that enable them to pay their bills.

The simple equation for the Living Wage Index is: L / W where “L” represents the number of households earning a living wage in the target community and “W” represents the total number of households in the target community. Albert Einstein said "equations are more important to me, because politics is for the present, but an equation is something for eternity." This equation has the potential to permanently change public policy in a way that politicians cannot.Wall Street is driven by measures like the Dow Jones Industrial Average (DJIA) and quarterly corporate reporting. Federal government policy is guided by aggregate indicators like national unemployment, the Consumer Price Index (CPI) and housing starts. The Living Wage Index, if utilized to measure municipal employment trends, will force political and business leaders to advocate for policies that would strengthen small businesses and rapidly increase local living wage employment.

The best way to save local businesses, transform poor communities and revive the national economy is to rely on the Living Wage Index to influence politicians to develop community programs like a “Shop Local Create Jobs” campaign. This type of effort would have the dual benefit of increasing living wage employment and saving those businesses who are truly too small to fail.

Thursday, October 4, 2012

The governments of the most powerful countries in the world have failed because they are forced to deal with the extremes of social policy. They are pulled in one direction by the extreme conservatives who want no government influence. They are pulled in the other direction by the extreme liberals who want complete government influence. This has led to extraordinary political conflict which has forced political leaders in the world’s richest countries to advance policies designed to treat the complicated symptoms of problems instead of the root causes of economic, social and environmental challenges.

The tragic result of treating symptoms has been chronic high global unemployment, sub-standard health care, wide-spread illiteracy, uncontrollable crime, global military conflict and environmental decay. It is time for the political leaders in the most influential countries in the world to use the principals of Intelligent Influence® to advance policies designed to address the root-causes of the world’s most significant problems.

Influence Awareness analysis tells us that the two-party system driven by powerful conservatives and liberals has led to a policy focus on short-term solutions designed to achieve temporary political gains instead of long-term improvements. Influence Impact analysis tells us that this approach to government has failed because high unemployment, poor health care, crime, war and poverty continue to be major problems.

Influence Management analysis tells us that every developed country is made up of neighborhoods and communities each with very different populations, characteristics and problems. However, the one factor that determines the relative success or failure of these communities is the percentage of people of working age holding living wage jobs (where an individual makes sufficient money to cover reasonable food, clothing, housing, health care, education and retirement expenses for their household).

I believe that there is an unexplored subset of economics that I call “Neighborhood EconomicsTM” that has not received the focus and attention it deserves. Tip O’Neil, the late Speaker of the US House of Representatives, was famous for saying that “all politics is local.”It is clear that “solutions to global problems are local” as well.History has proven that a “strong” global economy does not mean healthy communities around the world.The only way to effectively solve the most challenging problems in the world is to develop solutions that are custom designed for the unique needs of local communities and neighborhoods.One size does not fit all in politics or social sciences.

Communities with high living wage employment are more likely to have low unemployment, higher literacy rates, better health care, lower crime and less poverty. Consequently, the measure of success of local, state and national government policies should be the extent of living wage employment in a community. I call this Neighborhood CapitalismTM because it is based on free-market economic policies targeting local communities. Most economic theories fail because they are focused on using aggregate economic indicators and applying them to local communities. My theory of Neighborhood Capitalism is more reliable than these theories because it is focused on using local economic indicators as the foundation for assessing the health of the national and global economy.

The one indicator that most accurately measures the success of government policies is the Peace Influence IndexTM (P2I) (which is frequently called the “Caldwell Peace Index”). Every rational human being is striving for peace of mind, peace in their communities and peace in the world. It is therefore essential to have a measure of peace and prosperity that can be applied to communities everywhere.

The equation for P2I is:P = L – G/W where P2I is symbolized by the letter “P” which represents the percentage of “Peace” (and prosperity) in a target area; “L” represents the number of people in “Living Wage Jobs” in the target community; “G” represents the number of people employed in living wage jobs subsidized by 51% or more government funding; and, “W” represents the number of people of “Legal Working Age” in the target community. It is important to note that I subtract living wage jobs subsidized by 51% or more of government funding because these positions rarely serve as the foundation of a community’s long-term financial well-being. They are simply recycling tax dollars in a way that usually does not lead to sustainable economic growth.

Influence Maximization analysis tells us that if every government in the world were evaluated based on this relatively simple equation applied to key large communities they would be influenced to move more rapidly toward peace and prosperity. The beauty of this approach is that it does not matter how neighborhoods are determined geographically as long as the same geographic boundaries are used when identifying P2I trends. Public policies would be focused on providing incentives for large and small businesses and nonprofits/NGOs to hire unemployed workers at living wages. These new government programs would incentivize free market employment in a way that would reduce crime, improve health care, enhance public education and lead to the elimination of terrorism and war.

In a relatively short period of time this measure of free-market prosperity would move the world toward peace by significantly increasing the quality of life for every person on the planet. It is time for average citizens to ask their government leaders for the Peace Influence Index (P2I) trends in the communities where they live and work. This would enable them to measure the success or failure of their political leaders and make more informed political choices on election day.

About Me

Dr. Dale G. Caldwell is a speaker, author and philanthropist. He is someone who has attempted to practice what he preaches by utilizing his unique understanding of the power of influence to achieve personal and professional success. He developed the theory of "Intelligent Influence" to provide a framework for successful human interaction. This theory explains why celebrities stay in the public eye,organizations thrive, leaders are effective, athletes win championships and relationships blossom. More importantly, the theory provides insight into previously unexplored strategies to help individuals achieve life goals.